Traders are betting on a comeback quarter for Netflix

After a year-long bear market, an almost 20% decline year-to-date, and sell-offs after four of its past four earnings reports, options traders are striking a decidedly bullish tone heading into Netflix‘s earnings on Thursday.

Call volumes doubled puts in back-to-back sessions Friday and Monday, with almost three times as many calls bought versus puts by midday Monday, according to data from ThinkOrSwim. At the same time, one of the most popular trades was selling at-the-money puts.

The technical picture may be helping. At around $75, Netflix is trading about on par with where the stock was when it ended its pursuit of Warner Brothers Discovery in February. It was around this level in late 2021 that Netflix began a sharp, 80% selloff before a multi-year recovery that peaked at $134 in June last year.

“Netflix is now testing a rising 200-week moving average as well as the $70 prior resistance-turned-breakout level from late 2021,” Todd Gordon, founder and CIO at Inside Edge Capital, said in an email. “Should this $70 technical support hold, it may be time to consider changing the channel back to NFLX.”

Options pricing currently implies a 7.6% swing after earnings, compared to the average realized move of 7.4% the past year, according to Cboe LiveVol data. Netflix stock has fallen after four of its last four reports, after rallying three times a row in its preceding three reports.

Media watchers have pointed to a lack of engagement as the company has yet to have a major breakout hit in the last quarter. According to Nielsen, Netflix’s share of TV vieweship touched its lowest level in over a year. 

“Netflix has not had a breakout hit this year,” Rich Greenfield, co-founder and TMT analyst at LightShed Partners, said in a text. “Nielsen stats show they are growing engagement in the U.S. but with sub growth viewership per sub is down modestly. New ad-supported users likely watch less than older ad-free users so mix shift likely explains some of it as well as rising competition.”

The most popular contract by volume Monday was the 75-strike put expiring on Friday, thanks in part to one big seller who brought in just shy of $150,000 selling 500 of those puts. Among the 20,000 transactions on that put contract on Monday, 15,000 were likely sales, according to SpotGamma data.